The restaurant business as an extremely competitive industry, with new establishments opening and closing all the time. Restaurateurs must compete with many different dining options, from large franchises, to smaller, family-owned restaurants, who are all often surrounded by convenience stores, food trucks, and carts. A savvy entrepreneur can compete in this space with a combination of efficiency and effective targeting to a specific customer base. The type of restaurant envisioned in this scenario is a small restaurant that accommodates workers during the week, especially for lunch.
In Baltimore, restaurants are heavily regulated, where several licenses and permits must be acquired before doing business. The location must be zoned for restaurant use, and the facility itself must pass inspections by the fire marshal, building inspector, and the health department, both before and after opening for business. The biggest expense associated with these licenses and permits is meeting and maintaining the standards required to operate as a business, which may not be factored as monthly operational costs. Please visit the Department of Labor, Licensing and Regulation for requirements for your business at http://www.dllr.state.md.us/
The tables below depict the common issues and costs associated with operating a restaurant.
| Political | Labor laws – ensuring that staff is eligible to work in the US. Maintaining a safe work environment and compensating legally | |
| Economic | Disposable income of customers for eating out | |
| Location of brick and mortar location that is accessible, especially for lunch | ||
| Commodity prices | ||
| Social | Trends in restaurant style, such as indoor versus outdoor | |
| Competition from food trucks, especially for lunch | ||
| Methods of compensating sales staff – salary versus commission | ||
| Technological | Record keeping, including staff scheduling and inventory management – software and hardware | |
| Handling money and processing payments | ||
| Advertising online and using social media | ||
| Environmental | Waste disposal | |
| Sourcing, dependent on products (imports, lead, etc.) | ||
| Legal | Zoning restrictions | |
| Building permit | ||
| Use & Occupancy permit, including inspection by fire marshal, building inspector, health department | ||
| Water Discharge Permit (sewage) | ||
| Critical Success Factors | Brick and mortar location that is accessible to target market | |
| Gaining and maintaining all appropriate licenses and permits | ||
| Major Activities | Associated Costs | Cost Driver |
| Selling goods | Wholesale prices for products | Number of units of products ordered |
| Ordering and managing inventory | Staff time | Volume of products ordered; number of staff members per hour |
| Projected Expenses | |
| Employee Costs including benefits | Year One Cost per month |
| Owner | $ 3,500 |
| Book Keeper – Outsourced | $ 800 |
| Legal – Outsourced | $ 800 |
| Tech Support – Outsourced | $ 250 |
| Staff (2 cooks, 2 register) | $ 8,000 |
| Wages Subtotal | $ 13,350 |
| Taxes, Fees | $ 2,003 |
| Subtotal | $ 15,353 |
| Supplies/Stock | |
| Food & Beverage | $ 3,000 |
| Cleaning Supplies | $ 100 |
| Napkins/Paper Towels/Straws | $ 100 |
| Subtotal | $ 3,200 |
| Office/Facility | |
| Facility Expense (rent) | $ 1,700 |
| Electric | $ 300 |
| Water | $ 125 |
| Internet/Telephone | $ 100 |
| Office supplies | $ 50 |
| Property Insurance | $ 208 |
| Maintenance | $ 500 |
| Computers/Hardware | $ 100 |
| Subtotal | $ 3,083 |
| Marketing Costs | |
| Web site hosting and advertising | $ 200 |
| Web site updates | $ 100 |
| Business Cards, Pens, Swag | $ 50 |
| Subtotal | $ 350 |
| Restaurant | |
| Furniture and decorations | $ 3,300 |
| Subtotal | $ 3,300 |
| Projected Monthly Costs | $ 25,286 |